ar2020 - jamstockex.com

AR2020

KINGSTON LIVE ENTERTAINMENT

www.k legroupltd .com

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To be the premier entertainment and lifestyle group in Jamacia and beyond.

The KLE Group is now pursuing exciting new projects in franchising,

entertainment, tourism and real estate development.

Building dynamic lifestyle brands that will evolve the landscape of

entertainment, satisfy our customers, inspire our team, enhance our

community and deliver exceptional shareholder value.

Our Vision

Our Mission

Our Brands

USAIN BOLT’S TRACKS & RECORDS and TRACKS & RECORDSJamaican Themed Casual Dining Restaurant and Bar Kingston, Jamaica

BESSALifestyle Themed Boutique Villa Community.(Joint venture with Sagicor Life)St. Mary, Jamaica

SPF / FOREVER BEACHPremium Ultra All Inclusive Party Series

FRANCHISE JAMAICAFranchise Jamaica, Franchise specialists

SUMFEST ACOUSTIC CAFEJamaican Themed Fast-Casual Restaurant and Juice Bar

Board of Directors 2

Directors’ Profile 4

Management Team 5

Chairman’s Messege 6

Directors’ Report 7

Management Discussionand Analysis 8

Corporate Social Responsibility 11

Shareholding 12

Five Year Historical Review 14

Independent Auditor’s Reportand Financial Statements 16

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KLE Group Ltd. 2 Annual Report 2019

BOARD OF DIRECTORSThe K.L.E. Group Board of Directors is a group of individuals with the knowledge, experience and expertise required to maintain and grow a successful business. The Board is chaired by David Shirley and comprised of eight members representing some of Jamaica’s top business leaders and entrepreneurs. The Directors’ qualifications and profiles are set out in the Directors profile. The K.L.E. Group Board is dedicated to driving financial growth and delivering exceptional shareholder value. The Board will achieve the highest standards of Corporate Governance and be responsible for the effectiveness of the business entities, ensuring proper controls, monitoring performance, and directing management towards growth and success with the utmost integrity.

CORPORATE GOVERNANCEThe K.L.E. Group is guided by the Jamaica Stock Exchange Junior Market Rules and the Private Sector Organization of Jamaica (PSOJ) Corporate Governance Code which was adopted by a properly constituted Board of Directors in 2013 and is available on the company’s website, klegroupltd.com. The Board has implemented many of the best practice recommendations as set out by the PSOJ Governance code. The Board’s role is also to ensure transparency in achieving the goals of the business. A procurement policy was put in place by the Board to ensure transparency in the procurement of goods and services. It outlines a set of general principles and procurement procedures that should be adhered to in the procurement of all materials, goods and services. The Board met on three occasions during the financial year 2020

BOARD COMMITTEESThe Board’s function is to monitor the business systems, review business processes, make decisions, and set policy accordingly to drive the business forward, drive shareholder value,and achieve success. The Board has initiallyestablished two committees with clearlydefined responsibilities:

AUDIT COMMITTEEThe Audit Committee monitors and reviews the objectivity and effectiveness of all business systems. The Committee also monitors and reviews the financial health of the business and approves all budgets, internal audit functions and external financial statements.

The Committee during the year approved announcements on the company’s financial performance on a quarterly basis, as well as the audited financials and considered and recommended the group’s annual operating and capital budgets.

As at the date of this Annual Report, the Members of the Audit Committee, as appointed by the Board of Directors are:

David Shirley (Chairman) Non Executive Member IndependentGary Matalon Non Executive MemberNorman Peart Non Executive Member Independent

The Committee met on five occasions during the financial year.

REMUNERATION COMMITTEEThe Remuneration Committee reviews and approves all policies related to compensation and incentives of all board members and senior management of the company.

As at the date of this Annual Report, theMembers of the Remuneration Committee as appointed by the Board of Directors are:

Marlon Hill (Chairman)Stephen Shirley MemberJosef Bogdanovich MemberDavid Shirley Member

Circumstances did not warrant having a meeting during the financial year 2020.

In November 2020, due to the impact of the COVID-19 pandemic the decision was made to restructure the management in order to adjust the cost side of the business to better align with the new revenue realities facing the Company. The new structure entails the implementation of two separate committees of the Board with responsibility for overseeing the operations of the Restaurant Division and another for the Real Estate Division. The Restaurant Division Committee will be chaired by Gary Matalon, other members include Directors David Shirley, Normal Peart, Joe Bogdanovich and Marlon Hill. The Real Estate Division Committee will be chaired by David Shirley, other members include Directors Gary Matalon, Zuar Jarrett, Stephen Shirley and Joe Bogdanovich. Mr. Gary Matalon will continue to oversee franchise opportunities and other opportunities for growth. These changes became will allow the Company toalleviate the burden of the executive costs of a CEO until the external environment stabilizes and more reasonable predictions can be made on the way forward. The newly implemented structure is subject to revision in the coming months for appropriateness as things evolve.

Shareholders wishing a copy of the Annual Report or have any queries can forward the request or queries to [email protected]. Shareholders wishing to request a copy of the company’s last Annual General meeting please send written correspondence to the office at 67 Constant Spring Road, Unit 8, Market Place, Kingston 10.

BOARD OF DIRECTORS


DAVID ALEXANDER SHIRLEY, B.A. Chairman of the Board of Directors

Non-Executive Director

CHRIS DEHRING, BSc. Non-Executive Director

JOE BOGDANOVICHNon-Executive Director

GARY C. MATALON, M.B.A., P.M.P.Non-Executive Director

NORMAN PEARTNon-Executive Director

ZUAR ARD JARRETT, B.A., M. Arch. Non-Executive Director

MARLON A. HILL, ESQNon-Executive Director

STEPHEN ORLANDO SHIRLEY, A.S. Non-Executive Director

DIRECTOR’S PROFILES

DAVID SHIRLEYDavid A. Shirley, B.A., is a Founding Member and Chairman of the K.L.E. Group Ltd. His illustrious career spans over two decades and multiple industries in Jamaica, including Coffee, Sports, Entertainment, Tourism and Real Estate. He is Chairman and Co-founder of Locker Room Sports andthe Director and Co-founder of Velle Sport International. David has also holds the position of Managing Director of the Jamaica Coffee Corporation Limited since 2004, where he manages marketing and sales of 100% Jamaica Blue Mountain Coffee globally. He is also a Director of Stoneleigh Coffee Processors Limited, and Stoneleigh Coffee Roasters Limited. Along with KLE where he also serves as Director of the Bessa Villa Development partnership board, David is a Deputy Chairman of the Independence Park Ltd and Director of the Barbican Football Club. David enjoys playing various sports, including tennis, football and squash.

GARY MATALONGary Matalon is the Co-Founder and CEO of the KLE Group. He has made a name for himself as a business mogul, serial entrepreneur and innovative trendsetter who is eager to take on new adventures and revolutionize businesses. Matalon has founded several businesses including Project and Enterprise Management firm Neustone Ltd, KLE Group, FranJam and Sumfest Acoustic Cafe. Under his guidance,these companies have managed the development of several establishments such as the Marriott Courtyard, Richmond Estates, Fiction Lounge, Usain Bolt’s Tracks & Records and more recently, luxury real estate development, Bessa. Matalon achieved his BA in Business Management and Entrepreneurship from Lynn University and his MA in Business from the University of Liverpool. He also holds the prestigious credentials of a Project Management Professional (PMP) from Boston University. Gary is also Chairman of the Board of Directors of the Hillel Foundation.

CHRIS DEHRINGChris is a Director of the KLE Group and an experienced Senior Executive and Entrepreneur. He is well known across the Caribbean as one of the founders of Dehring, Bunting and Golding, Jamaica’s first investment bank. He was responsible for launching the sports television channel, Sportsmax, and was the CEO of the ICC Cricket World Cup in 2007. A former Senior Executive with Cable and Wireless, he played numerous roles in the telecommunications industry with C&W in Jamaica and the Caribbean including: Chairman, Chief Marketing and Commercial Officer, Senior Vice President, and Member of the Government Relations and Executive Leadership Team. He has taken his various

experiences and applied it to the successful launching of his new company, Ready TV. Chris played both football and cricket for Jamaica, with outstanding club careers in both sports. Awarded a football scholarship to West Virginia Wesleyan College in 1981, he won the USA National Soccer Championships, was awarded the Wall Street Journal Student Achievement Award for Economics and graduated with honors with a BSc. in Marketing and Economics.

JOE BOGDANOVICHJoseph James Bogdanovich is the Founder and CEO of DownSound Entertainment, owners of DownSound Records, Reggae Sumfest and a Member of the Board of the KLE Group. He is an accredited, self-made urban visionary and entrepreneur. He holds an Undergraduate Degree in Political Science from Boston University and a Master’s in Fine Arts (Film) from the California Institute of the Arts. In 1992, he began pursuing his greatest passion full time - music. He founded the ACID JAZZ Record Company in California and then DownSound Records in Los Angeles a year later. He was introduced to reggae and dancehall through an artist on his label, and after this, the California-born and raised businessman adopted Jamaica as his new homeland. Joe immediately began getting involved in the music and entertainment scene in Jamaica. In 2012 he became a full partner in the staging of Sting, the legendary one-night dancehall stage show. Then, in 2014, Bogdanovich became the largest single shareholder in the KLE Group. By March 2016, DownSound Entertainment acquired the major Jamaican summer music festival brand, Reggae Sumfest where KLE launched its second franchise, Sumfest Acoustic Cafe and later that year also acquired Hardware & Lumber, Rapid True Value. In 2018 Joe, went on to acquire The R Hotel in Kingston Jamaica.

MARLON HILLMarlon A. Hill is a Director of the KLE Group Ltd. and a partner in the Miami office of Weiss Serota Helfman Cole & Bierman, PL. With over 25 years of legal experience, Mr. Hill represents the interests of entrepreneurs, corporations, and non-profit organizations, especially in the tourism, hospitality, and media/entertainment industries. A past student of St. George’s College, Mr. Hill is one of the Inaugural Fellows in the Miami Foundation’s Miami Fellows Initiative and a current Member of the Board of Directors of the Miami Parking Authority, Miami Book Fair International, Greater Miami Chamber of Commerce, and Jamaican Men of Florida. Mr. Hill is a past member of Jamaican Diaspora Advisory Board representing the Southern United States (2006-2011). Mr. Hill is a weekly commentator


on Caribbean Riddims, “The People’s Politics”, CaneRadio.com, a recurring OpEd contributor to SunSentinel, SF 100 and former public affairs roundtable contributor to WPLG Local 10 “This Week in South Florida”.

STEPHEN SHIRLEYStephen Shirley, past Chairman of the Board and current Director of the KLE Group, has a love for business, entertainment and everything sports! It was this love that led to Stephen’s involvement in the establishment of Locker Room Sports in 1998, the KLE Group in 2008, and Velle Sport International in 2009. He currently serves as a Director on the Board for all three companies. His expertise also extends to the Coffee Industry. In 2017, he took on the role of CEO of Stoneleigh Coffee Roasters Limited., the company responsible for our 100% Jamaican Blue Mountain Roasted Coffee. He is also the Managing Director of Stoneleigh Coffee Processors Ltd, and Director of Jamaica Coffee Ltd. Stephen spent his school days between Munro College and Hillel Academy before attending the Miami Dade Community College where he received his Associate Degree in Business Management. Stephen Shirley is most comfortable and excited on the tennis court, football field, and any other sports arena he can get his hands on.

ZUAR JARRETTZuar Jarrett is one of the founders of the KLE Group andthe founder and Managing Director of Zuar Limited, a premier architectural, planning and interior design firm. Founded in 2004, Zuar Limited’s portfolio spans government, corporate and a host of well-appointed residences. His extensive portfolio of work include KLE’s previously owned Fiction Lounge as well as Tracks & Records restaurant. Mr. Jarrett brings tremendous experience in the entertainment industry, being a founder/director of DNA entertainment since 2004, an entity instrumental in the hosting and execution of the ATI Negril weekend and a host of other premium events. Mr.

Jarrett received various certifications in business from the Institute of Management and Production in Jamaica. He is also qualified as a designer in the areas of Architecture, Planning and Interior design from the Caribbean School of Architecture. Here, he was awarded a Bachelor of Arts in Architectural Studies with second class honors in 2000. He further received the European Union scholarship to pursue a Masters of Architecture which was completed in 2004.

NORMAN O. PEARTNorman Peart is a Member of the Board of the KLE Group and Business Manager to world-renowned international sprint sensation Usain Bolt. His areas of expertise are business and finance. He began his career in business by pursuing a Bachelor’s degree in Business Administration and Finance from the University of Technology in Jamaica. Afterward, he worked for the Government of Jamaica as a tax auditor from 2001 to 2009. Norman became Usain’s manager in 2003 when the sprinter was in high school and started showing glimpses of his prodigious talent. Under Norman’s tutelage, Usain’s career as a professional athlete took off! Peart organized for Bolt to sign with Puma and his relocation himself to Kingston. He also brought PACE Sports Management on board and facilitated the move to Coach Glen Mills in 2004. Peart is also a licensed Jamaica Securities Dealer and IAAF authorized athlete representative. He loves live music and good food, which made him the perfect fit for the KLE Group team where he could enjoy both at all Usain Bolt’s Tracks and Records restaurant locations.


Nicholas TaylorGeneral Manager

Richard McFarlaneFinancial Controller

Angiel ShawGroup Marketing

Manager

Christina EdwardsAssistant

General Manager

MANAGEMENT TEAM

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Dear Shareholders,

2020 was planned to be the year of real net profit growth for KLE Group. The company had decided to focus on restructuring and growing through owned restaurant units and investments in real estate and equities. Then came the COVID -19 pandemic which threw our plans into a tailspin. Our main revenue earner was slammed with uncertainty and immediate cashflow instability. We had recently committed to take over the Tracks & Records Montego Bay location with the intention to double projected revenues with reduce operational cost. The forecast was estimated at JMD$ 500,000,000 in revenue with a projected net income of 10% at the end of 2020.

Unfortunately, KLE Group was not in a position of strong capital reserves and has been carrying debt and payables for years, as the company was growing through minimal cash flow. The investment over the years has been strategic management recruitment, no director fees or dividends. The KLE Board was faced with their biggest challenge ever, how to protect the company’s investment in time, minimal resources, and shareholder capital.

Restaurant & Entertainment

Our first priority was to keep our management team intact. The CEO resigned in an effort to reduce cost and agreed to chair the Restaurant Committee which was made up of Gary Matalon (Chair), Josef Bogdonavich, David Shirley, Marlon Hill and Norman Peart. This team was charged with the responsibility of overseeing the management team of restaurant business and report to the board of directors. One of the biggest challenges was the need for capital injection given the anticipated loss in revenue due to COVID-19 uncertainty and later protocol restrictions. The management team implemented several strategies to keep the doors open but the toughest issue was the liability of the Marketplace rental payments, which ballooned due to the reduced traffic through the doors. KLE GROUP made the decision to invest in “Brand Jamaica” through a unique vehicle “Tracks & Records”. This themed location would showcase our music and sports culture “to di worl”. The board was challenged as to how best to support the management team, do we raise capital through a rights issue and dilute shareholders, or do we look to reduce our investments in other areas to gain inflows without increasing our liabilities?

We decided to continue to fight in 2020, be resilient and believe in our ability as a people to overcome obstacles. We will have to undoubtably “pivot” harnessing our creative powers and innovative thinking. We continue, to depend on our Restaurant Committee to guide the way forward for the Tracks & Records concept in 2021.

Investments

When KLE Group went public in 2011, the company made the decision to diversify its capital between new businesses and real estate. Funds were used to invest in the “Famous” night club and general business operations. The board also approved an investment in the “Bessa” real estate project in St. Mary, Jamaica. “Bessa” is a lifestyle real estate development conceptualized by KLE Group and introduced to Sagicor Investments as a potential equity and construction finance partner. The partnership involved Sagicor as the project manager, responsible

for the construction management and KLE as the sales and marketing manager, responsible for promoting the concept to potential buyers and investors. KLE also secured property management rights for “Bessa” which gives us the rights to earn management fees, event rentals and share in booking revenue. These rights are exclusive for three years with the option to renew, subject to strata approval.

The project is slated to be completed by January 2022 and investors can visit our website at www.bessaliving.com or instagram @Bessaliving.

In 2020 , KLE Group also created a Real Estate & Investments Committee chaired by David A. Shirley with committee members Stephen Shirley, Gary Matalon, Joe Bogdanovich, Zuar Jarret. This team was charged with the responsibility of overseeing the management of the real estate investments and other business opportunities.

Corporate Governance

With limited resources, KLE Group has remain compliant with the Jamaica Stock Exchange and has made every effort to communicate any foreseeable issues through our Company Secretary. We continue to report major changes in the company and engage our directors in major decisions that affect the shareholders. The pandemic has changed the way companies conduct annual general meetings and KLE will make every effort to comply to this requirement in 2021.

The executive leadership team for KLE Group in 2020 saw a major change with our CEO stepping down in an effort to reduce our exposure given the projected global impact of the pandemic on the “franchise” model. As we restructure the company, we continue to be grateful to our valued employees, suppliers, partners, directors, and shareholders and thank you for your unwavering support.

DAVID ALEXANDER SHIRLEY, B.A.Chairman

CHAIRMAN’S REPORT


DIRECTORS’ REPORT


OverviewKLE began 2020 on a path to major growth com-ing from expanding its local footprint in Jamaica though corporate owned and operated locations of Tracks and Records beginning with Kingston, Mon-tego Bay and Ocho Rios as the platform to build from. This growth formula was centered around the already established infrastructure and human capital the company had developed over recent years.

These plans were thwarted as a result of the global pandemic which drastically changed the entertain-ment and restaurant industries and more specifi-cally forced us to reengineer the strategy guiding the restaurant side of KLE overnight. The program for 2020 shifted from being our greatest profit year ever, to surviving the unknown. Fortunately for KLE, the Bessa investment was in its advanced stages and, despite the pandemic, has been able to continue progressing.

Acquisition of Tracks Mobay and the Start of the YearThe company had a formidable start to the finan-cial year in 2020. For the first two months KLE significantly grew its’ profits from operations and recorded two months with the highest revenues in the company’s history. The acquisition of the Mo-bay location was completed in the first week of the year and the transition from Franchise to Corpo-rate store was seamless. The additional location provided economies of scale seen most prevalent in Supply Chain, Accounting and Admin, Marketing and Human Resource Management.

COVID 19 Pandemic and its EffectsWith the restaurant and entertainment industries being two of the most affected industries by the pandemic worldwide and even more so in Jamai-ca, drastic measure were necessary in order for survival and to afford the company a chance to rebound in the future. Some of these measures included organizational restructuring, menu reduc-tions, cost containment, renegotiating payment terms with suppliers and redirected marketing strategies. Like many others in the industry, we bolstered our delivery capabilities through the cre-ation of our own delivery system as well as part-nering with the various delivery aggregators in the marketplace.

The pandemic and the governments containment measures resulted in over 90% decline in business for both operating restaurant locations. Further to that, Tracks and Records lost over 90% of our staff compliment. The immediate impact on the financial health of the business has been cata-strophic challenging the existence of the business model permanently. The board has been acutely focused on solutions to this situation as we gain more knowledge and understanding of the new markets we are operating in.

The company reported net losses in all financial quarters as a result of the impact of the pandemic on the industry and more specifically our market. This is obviously not sustainable in the longer term and we continue to make adjustments with the view to take advantage of the opportunities to come.

Bessa LivingThe Bessa living project has progressed relatively strong throughout the 2020 financial year. Sales of the project are expected to commence by Au-gust 2021, with a project completion date slated for January 2022. KLE has a 25% stake in the proj-ect which is expected to yield in excess of $50m net profit for the business. In collaboration with the Sagicor team, we are proud of the standard Bessa is being executed at.

Our FutureThe Board of Directors are working assiduously to provide the best financial solutions that can pro-vide management with the tools required to bol-ster KLE’s position to recover from the impacts of the pandemic and ultimately chart a brighter fu-ture for the business. The team is committed and ready to move the business forward in a direction that will position KLE to capitalize on the opportuni-ties once health risks are not as prevalent and the AGRESSIVE restrictions on travel and movements are lifted. We are focused on our mission to deliver maximum value and would like to thank our team members, customers, shareholders and all stake-holders for your belief in the company and commit-ment to making this mission a success.

OVERVIEWThe 2020 financial year saw the company strategically redesigning how it operated in order to traverse the crippling effects of the COVID 19 pandemic. The pandemic brought along with it, significant business challenges which was mainly due to the prolonged and continuously changing curfew protocols which restricted movement and has drastically impacted our regular operating hours.

The business went into survival mode as the pandemic wreaked havoc across the country. Some of our survival strategies included, the pause on all growth plans for the 2020 financial year, reducing the majority of non-operating expenses, cost reduction strategies to include wage cuts, layoffs, redundancies, supplier payment terms extensions and bi-monthly budget vs actual reviews and monitoring.

The year has been challenging but as a business we have grown in terms of the utilization of technology, setting up of our delivery systems and processes as well as improvements in the monitoring and reporting of our Key Performance Indicators.

REVENUESThe company’s total revenues for the 2020 financial year amounted to $151,379 million compared to $224,572 million in 2019, a decrease of approximately 33%. The revenues took a battering from the pandemic as the government imposed curfew prevented the business from operating within its key revenue earning periods. There is a direct correlation between the government curfew measures and revenues, when the curfew measures are relaxed revenue increased and when they are tightened revenue dropped significantly.

Revenue by year

Category 2020 2019 $’000 $’000

Restaurant 147,779 210,172Management fee 3,600 14,400

151,379 224,572 Revenue per week for a part of the year showing the correlation between various closing times as a result of the curfew hours.

MANAGEMENT DISCUSSIONAND ANALYSIS

KLE Group Ltd. 8 Annual Report 2019 KLE Group Ltd. 9 Annual Report 2019

RE-ENGINEERING OUR PATH TO REVENUE GROWTHThe company had to find new and innovative ways to maintain its revenues during these challenging times. The major changes came in the redesigning of our services to incorporate delivery, take outs and curbside pickup. We partnered with the various delivery aggregators such as 7Krave and My QuickPlate, which helped us to maintain a major presence in the market as this allowed us to supply numerous menu items to customers in an around the corporate area. We also launched our own internal delivery system with Errands Your Way Courier. This gave us a significant boost in daily sales as well a significant competitive edge. During the year 27% of our revenues were from take-out and delivery orders.

PROFITABILITYThe company Earnings Before Interest, Taxes Depreciation and Amortization also decline in the current year see table below; 2020 2019 $’000 $’000(Loss)/profit from operations (before finance costs, depreciation and taxation) ($47,873) $7,128Total Comprehensive loss for the year ($104,488) ($14,844)

The COVID 19 pandemic and the government containment measures is the greatest contributing factor to the significant net loss position of the company. Total comprehensive income for this current year amounted to $104.5 million in comparison to $14.8 million in the 2019 financial year.

COST OF SALESThe company’s total direct expenses (cost of sales) remains in line with our expected cost margins and mark ups. The decline in the cost of sales is related to the better supply prices based on price negotiation and contractual terms with vendors as well as the position the restaurant has taken to be more prudent with regards to ordering strategies. The decline was also brought about as a result of the declining revenues and business operation due to the pandemic.

ADMINISTRATIVE AND GENERAL EXPENSESAdministrative and other expenses amounted to $177,297 million when compared to the $170,512 for the previous year. The expense categories which showed the major increases were:• Bad Debts saw an increase of $21.6 million. • Depreciation and amortization expenses also saw an increase $19.5m mostly due to depreciation charged on the assets added to our fixed asset register for the Mobay Location as well as the adoption of the changes in the IFRS on lease accounting (IFRS 16).

All major increases showed declined during the year and is in line with the decline in business due to the pandemic.

Revenue by Order Type


CORPORATE SOCIAL RESPONSIBILITY


KLE values the community in which we serve and we take great pride

in making meaningful contributions to the people, the institutions

and the society as a whole. Due to the Covid 19 pandemic, we

were unable to execute the slew of plans we had for 2020. The

pandemic not only impacted our revenues, but also our resources

which we would have needed for our community outreach. We

are proud to have continued programmes that were utilized in

the previous calendar year, as well as indulge in new initiatives

and we are certain that these will become staples within our

annual calendar of events. We are also crafting new affiliations

with charitable organizations and remain entirely committed to

the promotion of nation building and youth empowerment.

LOSS FROM ASSOCIATE COMPANYThe company absorbed a $13.2 million loss from its associate company T&R Restaurant Systems Limited T/A Franchise Jamaica which added to the overall net loss position of the business. The company’s operations were brought to a halt as a result of the Covid-19 pandemic and plans are being made to resurrect operations with a new and innovative projects in the coming year. Franchise Jamaica reported total revenues of $1.9 million for the 2020 year in comparison to $30 million in 2019.

ASSETTotal Assets increased by $70 million moving from $214,496 million in 2019 to $284,750 million in 2020. The major contributing factor is the acquisition of the Montego Bay Location in the first quarter of the year.

The company is reporting negative working capital and current ratios as well as liquidity for the 2020 financial period. These negative ratios are expected to improve in the short to medium term as the company recovers from the effects of the pandemic.

INCREASING LIABILITIESAs a means to surviving the pandemic the company successfully renegotiated its credit facilities with our bankers, this in part is responsible for the rise in the loan balances when compared to the prior year. Also, a related party loan was obtained to seal the purchase of the Mobay operations.

Our short term liabilities also increased when a comparison was done with the prior year. This is directly related to our strategies geared at surviving the effects of the pandemic. We negotiated longer payment terms with suppliers which saw us making fewer payments during the year.

DECREASED SHAREHOLDERS EQUITYShareholders equity for the period decreased significantly by over 100% and is directly related to the negative earnings generated for the year.

For the 2020 financial year the business also recorded a negative earnings per stock unit. Earnings per stock unit for the year equaled negative 1.04

WORKING CAPITAL

CASH FLOW AND LIQUIDITYFrom a cash flow point of view, the company generated a negative cash flow from operating and investing activities due in large part to the acquisition of assets for the Mobay location. The company has less cash inflows from revenues generation for the year. However, there was significant cash inflows from loan activities.The overall liquidity of the company has decreased over the year due almost in entirety to the COVID-19 pandemic which seriously impacted general business operations. This however, is expected to improve in the coming year with the government initiatives, vaccines and relaxed restrictions.

OUTLOOKAs the company continued to experience the impacts of the COVID 19 Pandemic, it is steadfast in the monitoring and managing these effects to enable business continuity. There is grave uncertainty as it relates to when normalcy will return as this will affect how we plan and coordinate our recovery plan.

With the government containment measures still on going the company earning potential will continue to be hindered despite all the new measures that we have implemented. This however has not changed our passion and spirit to plan and prepare for the future to come.

KLE continuously tries to find effective and efficient ways of streamlining its structure and business operations. We remain confident and optimistic about the future as we have the right team and business model to achieve growth and sustained profitability in the future.

New and innovative marketing plans and initiatives are being developed with our team now somewhat adapting to what appears to be the new norm, and is ready to face the challenges in the coming year.KLE Group Limited would like to express a sincere thank you and appreciation to our hardworking and dedicated employees, who have all contributed to our accomplishments during the year. Also, our loyal customers for believing in our brands and their continued support to our business. Finally, to our shareholders and directors for their continued confidence and direction.

CONNECTED

SHARES

1,450,000


TEN LARGEST SHAREHOLDERS | AT QUARTER 31 DECEMBER 2020

NAMES

1 Bogdanovich, Joseph

2 Matalon, Gary

(Highbourne Ltd.- connected company)

3 Shirley, Stephen

(Anna-Kaye Martin-Shirley - connected party)

4 Sherwood Holdings Limited

5 Shirley, David

(Shani N. McGraham-Shirley - connected party)

6 Jarrett, Zuar

7 Steele, Colin

8 JCSD Trustee Services Ltd. - Sigma Global Venture

9 Jamaica Properties Limited

10 Drummond, Drum M.

(Cai M. Manley-Drummond; Lek I. Manley-Drummond

& Tyla M. Herrera; Rachel Manley - connected

parties)

Total

Others

Total Issued Shares

PERSONAL

SHARES

23,168,835

17,479,033

10,111,500

6,757,000

6,377,750

4,200,000

3,840,558

3,309,710

2,000,000

1,696,463

78,940,849

21,059,151

100,000,000

PERCENTAGE

OWNERSHIP

23.17%

17.48%

10%

6.76%

6.38%

4.20%

3.84%

3.31%

2.00%

1.70%

78.94%

21.06%

100.00%

SHAREHOLDINGS


SHAREHOLDINGS OF DIRECTORS | AT QUARTER 31 DECEMBER 2020

SHAREHOLDINGS OF EXECUTIVE MANAGEMENT | AT QUARTER 31 DECEMBER 2020

NAMES

1 Gary Matalon


2 David Shirley

(Shani McGraham-Shirley - connected party)

3 Joseph Bogdanovich

4 Zuar Jarrett

5 Stephen Shirley

6 Norman Peart

7 Marlon Hill

8 Christopher Dehring

NAMES

1 Gary Matalon


2 Vaughn Hutchinson

3 Stephen Greig

CONNECTED

SHARES

1,450,000

CONNECTED

SHARES

1,450,000

NO. OF SHARES

17,479,033

6,377,750

23,168,835

4,200,000

10,111,500

Nil

Nil

Nil

NO. OF SHARES

17,479,033

Nil

Nil


FIVE YEAR HISTORICAL REVIEW

STATEMENT OF COMPREHENSIVE INCOME


STATEMENT OF FINANCIAL POSITION

Statement of Comprehensive Income

2020

$'000

2019

$'000

2018

$'000

Revenue 151,379 224,572 219,931

Cost of Sales 44,370 (64,246) (65,672)

GROSS PROFIT 107,009 160,326 154,259

Other Operating Income 505 6,091 13,573

Administratine and Other Expenses (186,062) (170,512) (181,271)

Operating PROFIT/ (LOSS) (78,548) (4,095) (13,439)

Finance Cost (10,552) 8,645 (1,495)

(89,100) (12,740) (14,934)

Share of post-tax (loss)/ profit of equity accounted

associate (13,230) 4,748 12,685

Profit/ (Loss) before Taxation (102,330) 17,488 27,619

Taxation (1,627) 682 1,912

NET LOSS FOR THE YEAR FROM CONTINUING

OPERATIONS (103,957) 16,806 25,707

Net (loss)/ profit from discontinued operation -

NET PROFIT/ (LOSS) FOR THE YEAR (103,957) 16,806 25,707

OTHER COMPREHENSIVE INCOME:Items that may be reclassifeied to profit or loss-

Share of associate other comprehensive income -

Unrealized gain on available-for-sale investments (531) 1,962 120

120

TOTAL COMPREHENSIVE INCOME (104,488) (14,844) (25,587)

(Loss)/profit per stock unit (1.04)$ (0.17)$ (0.26)$

2017

$'000

2016

$'000

226,826 195,939

(69,610) (62,697)

157,216 133,242

5,527 182,703

(152,484) (144,182)

10,259 171,763

(2,374) (2,756)

7,885 167,007

257 (4,581)

8,142 167,426

810 857

8,952 165,283

- (1,362)

8,952 163,921

258 -

356 -

614

9,566 163,921

0.09$ 1.64$

Statement of Financial Position

2020

$'000

2019

$'000

2018

$'000

ASSETS

NON-CURRENT ASSETS:

Property, plant and equipment 108,562 22,908 31,389

Investment in joint venture 14,078 12,979 12,590

Investments 7,889 12,919 2,208

Investment in Associate 42,634 55,864 60,612

Longterm Receivables 7,330 9,737 12,490

Deferred taxed asset 8,241 9,868 9,186

Right of use asset 32,791

221,152 124,275 128,475

CURRENT ASSETS:

Inventories 3,525 3,461 2,608

Receivables 10,509 17,204 15,203

Due from related parties 44,734 63,387 46,872

Cash and bank balances 4,457 6,169 5,727

63,225 90,221 70,410

284,750 214,496 198,885

EQUITY AND LIABILITIES

EQUITY

Share Capital 122,903 122,903 122,903

Fair value reserve 1,907 2,438 476

Accumulated (deficit)/ surplus (129,961) (26,004) (9,198)

5,151 99,337 114,181

NON-CURRENT LIABLILTIES

Long term liabilities 178,545 57,690 -

Lease Liability - long term portion 25,413 - -

Due to related party - 1,043 1,527

203,958 58,733 1,527

CURENT LIABILITIES

Payables 53,755 42,125 68,730

Due to related parties 10,444 - -

Bank Overdraft 9,035 6,291 6,696

Taxation 646 648 983

Current portion of long term liabilities 12,063 7,362 6,768

85,943 56,426 83,177

284,750 214,496 198,885

2017

$'000

2016

$'000

45,497 60,896

13,141 12,754

2,088 -

73,297 72,782

14,737 -

7,080 6,098

155,840 152,530

2,932 3,214

10,399 22,759

26,109 35,596

9,907 9,443

49,347 71,012

205,187 223,542

122,903 122,903

356 -

16,509 7,299

139,768 130,202

7,038 11,217

- -

1,360 1,782

8,398 12,999

48,820 72,492

- -

3,040 3,426

967 859

4,194 3,564

57,021 80,341

205,187 223,542

KLE Group Ltd. 16 Financial Statements

Independent Auditors’ Report

to the Members 17 - 21

FINANCIAL STATEMENTS

Statement of Profit or Loss and

Other Comprehensive Income 22

Statement of Financial Position 23

Statement of Changes in Equity 24

Statement of Cash Flows 25

Notes to the Financial Statements 26 - 66

KLE GROUP LIMITED

INDEPENDENT AUDITOR’S REPORT AND FINANCIAL STATEMENTS


KLE Group Ltd. 18 Financial Statements KLE Group Ltd. 19 Financial Statements


K i n g s t o n L i v e E n t e r t a i n m e n t

KLE GROUP LIMITED

STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2020



KLE GROUP LIMITED

STATEMENT OF FINANCIAL POSITION

31 DECEMBER 2020



KLE GROUP LIMITED

STATEMENT OF CHANGES IN EQUITY




KLE GROUP LIMITED

STATEMENT OF CASH FLOWS




KLE GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

31 DECEMBER 2020



KLE GROUP LIMITED


31 DECEMBER 2020



KLE GROUP LIMITED


31 DECEMBER 2020



KLE GROUP LIMITED


31 DECEMBER 2020


KLE GROUP LIMITED



31 DECEMBER 2020


KLE GROUP LIMITED


31 DECEMBER 2020



KLE GROUP LIMITED


31 DECEMBER 2020



KLE GROUP LIMITED


31 DECEMBER 2020



KLE GROUP LIMITED


31 DECEMBER 2020


KLE GROUP LIMITED


31 DECEMBER 2020


ANNUAL REPORT 2020


KLE GROUP LIMITED


31 DECEMBER 2020



K.L.E. GROUP LTD.Unit 8, Marketplace

67 Constant Spring Road, Kingston 10

(876) [email protected] | www.klegroupltd.com

K.L.E. Group Ltd. RegistrarSagicor Bank Jamaica Ltd.Corporate Trust Division

ar2020 - jamstockex.com

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